| Summary: | 碩士 === 中國科技大學 === 企業管理研究所 === 101 === Due to the deregulation in financial industry, several penalties have been imposed on the financial institutions for management and staff frauds or for violations of financial regulations resulting from weak internal control. How to construct and implement effective internal control and corporate governance remains an important and ongoing issue with this regard.
This study collects the data on penalties imposed on banks during 2005-2011 from Financial Supervisory Commission. Also, several operating performance indexes are taken into consideration, including the structure of the board of the directors and supervisors, the composition of shareholders, the turnover of the executive managers, the turnover of the CPA, etc. CAMEL Rating System is used in the study to explore how corporate governance and internal control deficiencies affect the operation performance of the financial institutions.
The major findings are summarized as follows:
1. No correlation is found to exist between the wellformedness of the organization structure and the frequency of penalties. The financial banks with a more robust structure of the board of directors and supervisors do not necessarily have a lower frequency and being penalized.
2. The operating performance and the frequency of penalties resulting from the internal control deficiencies are significantly and negatively correlated.
3. The operating performance of the financial institutions are significantly positively correlated to the size of the board of directors, the percentage of the independent directors, and the ratio of the shares held by the directors and supervisors.
4. The operating performance of the financial institutions are significantly negatively correlated to the ratio of shares held by major shareholders and the turnover rate of executive managers.
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